Tech stocks suffered their biggest one-day drop since 2022 as investors’ concerns over an impending economic recession intensified.
The Nasdaq 100 index plunged 3.8%, with Monday’s sell-off wiping out more than $1 trillion in market value. Meanwhile, the Bloomberg Big Seven Technology Index (an equal-weighted index tracking the largest U.S. technology stocks) dropped 5.4%, extending its decline from December to over 20%. Tesla Inc. fell 15%, widening its year-to-date decline to 45%, while Nvidia Corp. dropped 5.1%, with its market value evaporating by more than $1 trillion in two months.
Before the tech stocks crashed, officials of the Trump administration and President Donald Trump himself had hinted that the US economy would slow down. Trump had promised during his campaign that he would impose tariffs on the first day of his tenure to pay for tax cuts without affecting economic growth. This wording was different from that during the campaign, which triggered a frantic repricing of risky assets.
Michael Bailey, research director at Fulton Breakefield Broenniman, said: “Sell your winning stocks, embrace the bear market scenario, and then hunker down and cover up.”
From almost any perspective, until recently, the winners have been the large technology companies. The valuations of Nvidia, Microsoft and Apple soared to over $3 trillion, with Amazon and Alphabet not far behind. Even Tesla’s market capitalization exceeded $1 trillion.
For weeks, Wall Street has been cautiously shifting from technology stocks to more defensive sectors as volatile trade policies have unnerved investors and inflation has remained stubbornly high. The rotation accelerated on Monday following disquieting economic growth remarks over the weekend.
In the speculative market sector, the sell-off was even more extreme. On Monday, the share prices of a basket of unprofitable technology companies dropped by 6.6%, and have fallen by 23% so far this year. The index is on track for its worst quarterly performance since 2022.
When asked if he expected an economic recession this year, Trump said, “I hate predicting such things. There’s a transition period because what we’re doing is very big.” On Friday, Treasury Secretary Scott Bessent spoke of the “detox period” the US is going through as it moves away from public spending.
Apart from Meta, all Mag 7 stocks are in the red this year. Nvidia has seen a double-digit decline, while Tesla’s market value has shrunk by nearly $600 billion so far in 2025.
James Abate, chief investment officer of Centre Asset Management LLC, said: “All these stocks are priced perfectly. Clearly, the market is reducing risk.”
Citigroup downgraded its rating on the U.S. stock market from “overweight” to “neutral”, while upgrading its rating on the Chinese stock market to “overweight”, and said that the “American exceptionalism” has at least temporarily been put on hold.
Since October 2023, this US investment bank has been increasing its holdings of US stocks, but its ability to outperform the broader market has become more evident, according to Dirk Willer, the global head of macro research and asset allocation at the firm, in a report.
At the same time, he said that given DeepSeek’s breakthroughs in artificial intelligence technology, the government’s support for the technology industry, and still relatively low valuations, the Chinese stock market remains attractive even after its recent rally.
Weller wrote: “In the coming months, the flow of economic news from the US may be weaker than that from the rest of the world. Therefore, at least tactically, the US exceptionalism is unlikely to make a comeback.” He added that the neutral view on the US stock market is for a three-to-six-month time frame, as more negative US data is expected.
